Unable to reduce Blender file size for render farms?
You can set the Outliner to Blender File mode and go through all the data saved in the file to see if you have something not needed there or maybe duplicates:

You should not apply modifiers since procedural stuff will take less space. Same might be true for baking animation. I would recommend to test it. Generally you might want to do calculations during render instead of pre-calculating and saving the results to the file using space.
Other than that there is no rule that it should be possible to render any kind of project on SheepIt. It might just not be possible and you will need to search for another render farm with less restrictions or other rendering solution.